Nail Salon Owners Sue Cuomo and New York State Over Wage Bond Requirement

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Reyna Morena, left, and Jeong Lee, standards investigators for the New York Labor Department, inspecting the treatment rooms at Lyn's Nail Salon in Queens last month. Salon owners have filed a lawsuit against Gov. Andrew M. Cuomo over a rule requiring them to buy wage bonds.CreditNicole Bengiveno/The New York Times

Two groups representing nail salon owners sued Gov. Andrew M. Cuomo and the State of New York this week over a new requirement that says salons must obtain wage bonds, a form of insurance meant to protect workers from wage theft.

The lawsuit, filed in State Supreme Court in Albany on Thursday on behalf of the Korean American Nail Salon Association of New York and the Chinese Nail Salon Association of East America, says that too few surety companies offer the wage bond, and that those that do have such strict requirements — such as high personal credit scores — that the bond is out of reach for many owners.

By requiring a product that is not “ ‘readily available’ to the salon owners,” the suit says, the State Financial Services Department “has set up thousands of good operators for failure.”

In August alone, the state’s multiagency task force on nail salons inspected 182 businesses and found 901 violations. As of early this month, 43 percent of salons inspected in August had been found to not have paid minimum wage or overtime.

State officials emphasized that they had made significant efforts to educate salon owners on what is required of them, including 15 informational forums for owners, and had tried hard to help them comply.

“The overwhelming majority of nail salon owners who have made a good-faith effort to secure a wage bond have been able to do so,” Frank Sobrino, a spokesman for the governor, said in a statement. “We will work with any owner who, for whatever reason, is having difficulty securing a bond. Our goal is to ensure a fair day’s pay for a fair day’s work in an industry with a history of exploitation.

“Employers who pay their workers what they are legally owed have nothing to fear about a wage bond.”

According to the state, of the 1,188 wage bond applications received by surety companies since the requirement was put into effect, only 18 have been denied, and 98.5 percent of the 1,166 applications processed as of Wednesday had been approved.

A version of this article appears in print on , on Page A16 of the New York edition with the headline: Nail Salons Sue Cuomo and the State Over a New Wage Bond Requirement. Order Reprints | Today’s Paper | Subscribe